Modernizing Medicine to pay $45M to resolve False Claims Act allegations

Modernizing Medicine, the Boca Raton, Florida-based developer of electronic health record technology, has agreed to pay $45 million to resolve allegations that it violated the False Claims Act, the U.S. Department of Justice announced this week.

The Justice Department alleges that ModMed accepted and provided “unlawful remuneration in exchange for referrals and by causing its users to report inaccurate information in connection with claims for federal incentive payments.”

As U.S. Attorney for the District of Vermont Nikolas P. Kerest explained in a statement, “the government alleges that for years, ModMed, through a variety of schemes, engaged in illegal kickbacks that distorted both the EMR and pathology lab markets, in addition to providing its users with a deficient product. This resolution reflects the seriousness of the government’s allegations and the determination of the Department of Justice to restore integrity to the electronic health record field.”

The DOJ alleges that ModMed violated the FCA and the Anti-Kickback Statute through three marketing programs:

  • The company is alleged to have solicited and received kickbacks from Miraca Life Sciences in exchange for recommending and arranging for ModMed’s users to utilize Miraca’s pathology lab services.
  • The complaint also alleges that ModMed conspired with Miraca to “improperly donate ModMed’s EHR to health care providers in an effort to increase lab orders to Miraca and simultaneously add customers to ModMed’s user base.”
  • The DOJ claims the company paid kickbacks to its provider customers and others to recommend its EHR and refer potential customers to ModMed. 

The government alleges that this conduct enabled ModMed to “improperly generate sales for itself and for Miraca, while causing healthcare providers to submit false claims for reimbursement to the federal government for pathology services, and for incentive payments from the Department of Health and Human Services for the adoption and ‘meaningful use’ of ModMed’s EHR technology.”

The settlement partly resolves allegations contained in a lawsuit filed by Amanda Long, a former vice president of product management at ModMed, the DOJ notes. Given that the suit was filed under the whistleblower provisions of the FCA, which allow individuals to sue on behalf of the government and to share in any recovery, Long will receive about $9 million.

In January 2019, Miraca – which is now called Inform Diagnostics – paid $63.5 million to resolve allegations that it had violated the Anti-Kickback Statute and the Stark Law by providing to referring physicians subsidies for EHR systems and free or discounted technology consulting services.

Since the DOJ promised five years ago that it would set its sights on more EHR vendors’ potential false claims violations – it recovered $3.7 billion from False Claims Act cases in 2017, including from major vendors such as eClinicalWorks – the department has continued to bring about some substantial monetary settlements, including $57 million paid out by Greenway in 2019.

EHR companies should consider themselves on notice,” said one U.S. Attorney after that 2019 finding.

More recently, CareCloud paid $3.8M to the DOJ in 2021, to settle kickback allegations for its marketing-referral program.

“Today’s settlement marks the fourth resolution that our office has achieved as we seek to root out fraud in the electronic health record technology field,” said Kerest. “It is imperative that medical providers be able to trust the health record systems with which they document important and sensitive patient information, and for too long electronic health record vendors have prioritized only sales.”

“Electronic health records serve a critical role in informing physician decision making, and it is therefore essential that health care providers select such technology free from the influence of improper financial inducements,” added Principal Deputy Assistant Attorney General Brian M. Boynton in a statement. “Vendors of electronic health records will be held to the same standards of compliance that we expect of everyone who provides health care services.”

Twitter: @MikeMiliardHITN
Email the writer: [email protected]

Healthcare IT News is a HIMSS publication.

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